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JOINT CIRCULAR No

JOINT CIRCULAR No. 02/2002/TTLT-BKH-BCN-BTC OF AUGUST 6, 2002 GUIDING THE TRANSFER AND RECEIPT OF OUTSIDE-THE FENCE ELECTRICITY WORKS AND THE REFUNDING OF CAPITAL TO FOREIGN-INVESTED ENTERPRISES WHICH HAVE INVESTED IN THE BUILDING THEREOF

In furtherance of the Prime Minister’s instruction in Document No. 477/CP-KTTH of May 8, 2002 of the Government Office on reimbursing capital invested by foreign-invested enterprises in outside-the fence electricity works, the Ministry of Planning and Investment, the Ministry of Industry and the Ministry of Finance hereby jointly guide the transfer and receipt of outside-the fence electricity works and the refunding of capital to foreign-invested enterprises which have invested in the construction thereof as follows:

Chapter I

SCOPE OF AND RESPONSIBILITY IN THE TRANSFER AND RECEIPT OF OUTSIDE-THE FENCE ELECTRICITY WORKS.

1. Scope of transfer and receipt of works:

1.1. Interpretation of terms:

- "Transferor" means foreign-invested enterprises operating under the Law on Foreign Investment in Vietnam, which can be enterprises with 100% foreign-invested capital, joint-venture enterprises or parties to business cooperation contracts.

- "Transferee" means Vietnam Electricity Corporation or units authorized by Vietnam Electricity Corporation.

- "Fence base" means the point delimiting the land area used by the transferor under the land allocation decision of a competent agency.

- "Electricity supply point" means the position of the electric switch box, where the electricity meter is installed to measure the electrical energy traded between the electricity seller and buyer.

- "Electricity connection point" means the point where the transferor’s electricity supply work is connected to the national power grid.

- "Outside-the fence electricity works" are construction items determined as being situated between the fence base and the electricity connection point.

1.2. The scope of transfer and receipt of assets serving as basis for capital refunding:

1.2.1. The scope of transfer and receipt of assets serving as basis for capital refunding is the outside-the fence electricity works already invested by the transferor.

1.2.2. Where the electricity supply point is situated inside the fence, the assets situated from the fence base to the electricity supply point shall be transferred if the two parties so agree and clearly inscribe such in the transfer and receipt dossiers. The scope of transfer and receipt is determined as follows:

a/ Where the electricity work has a voltage of 0.4 kV or lower, the scope of transfer and receipt shall be calculated to the position where the electricity meter is installed.

b/ Where the electricity work has a voltage between over 0.4 kV and 35 kV, the scope of transfer and receipt shall be calculated to the point of connection of the electricity supply line with the breaking device or the high-voltage bar of the distribution transformer station.

c/ Where the electricity work has a voltage of 110 kV or higher, the scope of transfer and receipt shall be the entire 110 kV transformer station (including the medium-voltage cabinets).

1.3. The following cases shall not fall into the scope of transfer and receipt:

- Works which have been constructed with the original purpose of supplying electricity for the enterprise’s operation but, at the time of transfer, they are used by the transferor for the purpose of selling electricity.

- Works which have been received and refunded by Vietnam Electricity Corporation.

- Electricity works built in the ground-clearance areas and subject to relocation.

2. Responsibilities of the transferor and transferee:

2.1. The transferor:

- To prepare all dossiers and vouchers as prescribed in Chapter II of this Joint Circular, to participate in the Council for valuation of to be-transferred assets; to transfer assets and create favorable conditions for the receipt thereof by the transferee.

- To create every favorable condition for the transferee in the operation, maintenance as well as repair of the electricity works situated inside the fence, the transfer of which has been agreed upon by the two parties as prescribed in Section 1, Chapter I of this Circular.

- To create favorable conditions for the transferee to have a corridor for investment in outward lines from the 110 kV-voltage transformer station to supply electricity for neighborly areas.

2.2. The transferee:

- To receive all dossiers and vouchers as prescribed in Chapter II of this Circular, to participate in the valuation council, receive assets and refund capital to the transferor.

- To remove the electricity meters to positions suitable to the scope of transfer and receipt.

Chapter II

TRANSFER AND RECEIPT DOSSIERS

A transfer and receipt dossier may be the original dossier as prescribed or a dossier in substitution of the original dossier or a dossier compiled in the transfer and receipt process, specifically as follows:

1. The prescribed original dossier consists of:

- A copy of the investment license.

- The electricity supply plan already approved by competent functional agency.

- The written agreement on the line.

- The document on the land allocation, the land-lease contract directly related to the power line and station.

- The approved technical design.

- The drawing on the completed work.

- The work sections already transferred, settled, and audited by an independent audit company operating lawfully in Vietnam.

- The written registration of the depreciation rate or the depreciation duration of fixed assets already accepted by the finance agency.

2. For cases where dossiers as prescribed in Section 1 above are incomplete: the transferor shall coordinate with the transferee in fulfilling the following tasks:

- To supply dossiers (in Section 1 above) which the transferor possesses to the transferee.

- To make a report evaluating the actual quality conditions and determining the value of the transferred assets according to the provisions in Chapter III of this Circular.

- In cases where land allocation documents and written agreement on lines are not yet available, the dossier on the power line and station corridor outside the fence shall be compiled and certified by the provincial-level People’s Committee.

3. Dossiers to be compiled in the transfer and receipt process:

- The plan of the actual ground of the works to be received.

- The plan of the connection point (single line) of the works to be received.

- The list of the quantities and categories of equipment and line supplies, and their quality description.

- The transfer and receipt report, made according to a set form.

- The report determining the residual value of the transferred assets, which has been evaluated by the valuation council, made according to a set form.

4. Quantity of dossiers: The transferor shall hand over to the transferee two sets of dossier; any copies must be notarized. Regarding the written agreement on the line, the land allocation document and the land-lease contract, they must be originals.

Chapter III

DETERMINATION OF THE VALUE OF TRANSFERRED ASSETS, TO BE-REFUNDED CAPITAL

1. Cases of complete dossiers: The value of to be-returned assets is determined as follows:

The value The original price The accumulated

to be = of fixed assets on the - wear-and- tear value of fixed assets

refunded accounting book on the accounting book

2. Cases of incomplete dossiers: the value of to be-returned assets is determined as follows:

The value The actual The unit The accumulated

to be = quantity x price of - wear-and- tear value

refunded of assets each asset of fixed assets

in which:

a/ The actual quantity of assets shall be determined on the basis of the actual inventory figures of the work sections to be transferred and received.

b/ The unit price of each fixed asset shall be determined on the basis of:

- The ceiling unit price set by the locality at the time of investing in building the work. Where the ceiling price is not set by the locality, the ceiling price at the time of investing in building the works shall be the unit price prescribed by Hanoi, Da Nang or Ho Chi Minh City, depending on whether the works are located in the northern, central or southern region of the country.

- For the value compensated for ground clearance, valid invoices and vouchers of the transferor shall be accepted.

c/ The duration during which the fixed assets have been used shall be calculated in month and from the time the fixed assets are put to use to the month when the report determining the residual value of the assets is signed.

d/ The accumulated wear-and-tear value is determined as follows:

- Where the transferor has registered a depreciation percentage, the accumulated wear-and-tear value shall be determined by multiplying the original price of the fixed asset by the registered depreciation percentage and with the fixed asset-using duration. The original price of a fixed asset means the original price of such fixed asset on the accounting book, for cases of complete dossiers, or the re-evaluated original price, for cases of incomplete original dossiers as prescribed.

- Where the transferor does not register a depreciation percentage nor a fixed-asset depreciation duration with the finance agency, the asset depreciation percentage shall be 7% a year.

3. Cases where assets have been fully depreciated but still in use: the transferor and transferee shall determine the quantity and quality of each construction item in order to identify the actual residual value of the entire work, then report it to the valuation council. The actual residual value of the entire work must not exceed 10% of the original value of the asset.

4. The valuation councils:

4.1. The valuation councils shall be set up by decisions of the provincial-level People’s Committees of the localities where exist the outside-the fence electricity works. A valuation council shall be composed of a leading official of the provincial/municipal Finance and Pricing Service as its chairman, a leading official of the unit who is authorized by Vietnam Electricity Corporation as its standing member, and representatives of the provincial/municipal Industry and Planning and Investment Services and the provincial-level Industrial Parks Management Board (for works situated within the industrial parks), and the transferor. Apart from the above-said members, in case of necessity, the council chairman may invite other technical, economic and financial organizations and experts to participate in the council.

4.2. The valuation councils shall have the following tasks:

- To organize the evaluation or hire auditors to determine the value of assets to be transferred and received. The evaluation or auditing result must be inscribed in a report signed by all members. The valuation councils shall be accountable for the legality of the asset transfer and receipt dossiers submitted to the provincial-level People’s Committees for approval for use as capital-refunding basis.

The auditing expenses shall be incorporated in the value of assets to be transferred.

- To sum up and report on a monthly basis the situation of transfer and receipt and capital refunded to the provincial-level People’s Committees.

Chapter IV

ORGANIZATION OF RECEIPT AND CAPITAL REFUNDING

1. Order for transfer and receipt and capital refunding:

1.1. Planning the receipt and the capital refunding:

a/ Within 30 days after this Circular comes into force, the provincial/municipal Planning and Investment Services or the provincial/level Industrial Parks Management Boards shall send the duplicates of this Circular to foreign-invested enterprises and request the enterprises eligible for refunding of capital already invested in outside-the fence electricity works to officially notify the local electricity authorities of their transfer and receipt and capital refunding requirements.

b/ Within 30 days after receiving the notices of the provincial/municipal Planning and Investment Services or the provincial-level Industrial Parks Management Boards, foreign-invested enterprises wishing to transfer their works and have their capital refunded shall send written requests to the local electricity authorities. After this time limit, if the enterprises fail to send written requests to local electricity authorities, they shall be regarded as having no need to transfer electricity works and have their capital refunded.

c/ Past 15 days but no more than 30 days after receiving the written requests of the enterprises, the local electricity authorities must notify in writing the time, venue and working contents to the enterprises related to the asset transfer and valuation.

1.2. The transferor shall prepare dossiers according to Chapter II of this Circular.

1.3. The transferor and transferee shall jointly inventory the quantity, assess the residual value of each asset, examine the original dossiers, make a report on the asset transfer, then submit it to the valuation council for consideration.

1.4. Within 15 days after receiving the asset transfer report submitted by the transferor and transferee, the valuation council shall evaluate the value of the transferred assets for submission to the provincial-level People’s Committee for approval.

1.5. Based on the approval decision of the provincial-level People’s Committee, the transferor and transferee shall proceed with the transfer and receipt of assets and with the capital refunding.

2. The transferee shall receive assets and complete the refunding of capital to the transferor within 30 days after the date the approval decision of the People’s Committee is issued.

3. Monthly, Vietnam Electricity Corporation shall report to the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Industry and the provincial-level People’s Committees on the situation of transfer and receipt and capital refunding.

Chapter V

ORGANIZATION OF IMPLEMENTATION

1. The provincial-level People’s Committees shall direct the setting up of valuation councils, approve the to be-refunded values, inspect and monitor the refunding of capital of outside-the fence electricity works to foreign-invested enterprises.

2. Vietnam Electricity Corporation shall direct the electricity companies and provincial/municipal electricity authorities to organize the receipt of works, capital refunding and management of received assets according to the provisions of this Circular.

3. Should any problems arise in the transfer and receipt process, the valuation councils should promptly report them to the Ministry of Planning and Investment, the Ministry of Industry and the Ministry of Finance as well as the provincial-level People’s Committees for consideration and settlement.

4. This Circular takes effect 15 days after its signing.

For the Minister of Planning and Investment

Vice Minister
VU HUY HOANG

For the Minister of Industry

Vice Minister
HOANG TRUNG HAI

For the Minister of Finance

Vice Minister
TRAN VAN TA